Current account is given by the equation:
A) CA = IM - EX (measured in terms of domestic output).
B) CA = IM - EX (measured in terms of foreign output).
C) CA = EX - IM (measured in terms of domestic output).
D) CA = EX - IM (measured in terms of foreign output).
E) CA = EX + IM (measured in terms of domestic output).

Question

Quizplus · Accepted Answer

The current account measures the net exports of goods and services, which is given by the difference between exports (EX) and imports (IM). In this case, the measure is in terms of domestic output, so we use EX - IM to calculate the current account.

Current Account Is Given by the Equation